On August 28, 2019, the U.S. Environmental Protection Agency (EPA) proposed policy amendments to the 2012 and 2016 New Source Performance Standards (NSPS) for the Oil and Natural Gas Industry. As the period for public comment comes to a close on November 25, 2019, Hart Energy featured insights from Benjamin R. Rhem on the latest action, the oil and gas industry’s response, and what to expect.
Issued in response to President Donald Trump’s Executive Order on Promoting Energy Independence and Economic Growth, the rule’s primary proposal would redefine the types of sources covered under the oil and gas industry to remove all sources in the transmission and storage segment of the oil and natural gas industry from regulation under the NSPS, both for ozone-forming volatile organic compounds (VOCs) and greenhouse gases (GHGs). In addition, the primary proposal would rescind emission limits for methane from the remaining segments in the oil and gas industry – production and processing.
As a secondary proposal, EPA would not redefine the types of sources covered under the oil and gas NSPS, but would still rescind the methane emission limits for the oil and gas industry. The rule would retain VOC standards for the production, processing, and transmission and storage segments of the industry. As in the primary proposal, the alternative proposal notes that because the controls to reduce VOC emissions reduce methane at the same time, separate methane limitations for the industry are redundant.
Per EPA’s regulatory impact analysis, the proposed amendments would save the oil and natural gas industry an estimated $17-$19 million a year—a total of $97-$123 million from 2019 through 2025.
“Typically, you see industries that are pretty unified on these types of rulemakings, but here it seems to be a unique situation,” Ben said. “There are folks within the oil and gas industry on both sides of the fence on this particular rulemaking. Some just want to move forward with the rules as they are and not make those changes. Others think that the methane emissions requirements are burdensome and intrusive.”
“Typically, you see industries that are pretty unified on these types of rulemakings, but here it seems to be a unique situation.”
“The alternative proposal is a less massive overhaul than the first option,” Ben added. “Still, pulling back the methane emissions is still a big deal considering how much went into the rulemaking in 2012 and 2016, how the industry generally pushed back on those regulations, the fact that they got through and now being rolled back.”
Maybe even more important than the specific requirements of the oil and gas NSPS, as part of this proposal, EPA is also seeking comment on the EPA’s previous interpretation in 2016 that the law did not require EPA to first make a separate, pollutant-specific determination that GHG emissions from the oil and gas industry significantly caused or contributed to air pollution that may reasonably be expected to endanger public health or welfare. The fact that EPA is seeking comment on this issue suggests that the current EPA may consider a pollutant-specific and industry-specific endangerment finding is required prior to regulating a pollutant under the NSPS program.
Regarding what’s next for EPA’s proposed rule, Ben noted: “It takes a long time just to go through the rulemaking process and even if they do get finalized they can be subject to litigation. Depending on how far up the litigation goes, whether it’s going to the federal circuit courts or up to the Supreme Court, that can take years so it certainly can go past the end of President Trump’s first term.”
To view the full article from Hart Energy, read “EPA’s Methane Emission Proposal Fuels Oil And Gas Uncertainty.” A subscription is required to view the full article.
Benjamin R. Rhem advises clients in the power generation, oil and gas, and mining industries regarding compliance with federal and state environmental laws. He works regularly before the Texas Commission on Environmental Quality and the United States Environmental Protection Agency. Ben’s practice also extends beyond environmental law, as he assists clients dealing with regulatory issues before Federal Energy Regulatory Commission, Pipeline and Hazardous Materials Safety Administration, the Railroad Commission of Texas, and Mine Safety and Health Administration.
Ben has given numerous presentations regarding environmental and pipeline regulations, and in July 2015, his presentation entitled “GHG Regulation and the Politics of Climate Change for the Oil and Gas Industry” was published in the 61st Annual Rocky Mountain Mineral Law Institute. Ben has also co-authored the 2018 edition of O’Connor’s Texas Oil & Gas Statutes & Regulations with fellow Jackson Walker attorneys Jay K. Wieser and Joseph “Tré” A. Fischer. He received his J.D. from the University of Houston Law Center and has been recognized among Thomson Reuters’ “Super Lawyers – Rising Stars” list since 2016.